SREBPs exit the ER in a complex with SCAP. Together, they move to the Golgi where SREBP is cleaved, releasing a fragment that activates genes encoding lipid biosynthetic enzymes. Sterols block ER exit, preventing cleavage, decreasing transcription, and achieving feedback control of lipid synthesis. Here, we report an in vitro system to measure incorporation of SCAP into ER vesicles. When membranes were isolated from sterol-depleted cells, SCAP entered vesicles in a reaction requiring nucleoside triphosphates and cytosol. SCAP budding was diminished in membranes from sterol-treated cells. Kinetics of induction of budding in vitro matched kinetics of ER exit in living cells expressing GFP-SCAP. These data localize the sterol-regulated step to budding of SCAP from ER and provide a system for biochemical dissection.